Egyptian businessman Naguib Sawiris’ Weather Investments has registered a US$5bn damages claim against Algeria concerning its stake in Orascom Telecom Algerie (Djezzy).
Luxembourg-based Weather has lodged the claim with the World Bank’s…
Egyptian businessman Naguib Sawiris’ Weather Investments has registered a US$5bn damages claim against Algeria concerning its stake in Orascom Telecom Algerie (Djezzy).
Luxembourg-based Weather has lodged the claim with the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID), alleging the Algerian state has repeatedly breached legal obligations in a “campaign of harassment and improper interference”. This has culminated in the “attempted forced sale” of all or part of Djezzy to the Algerian state, Weather contended in a statement today.
Weather claimed Algeria has breached multiple obligations under a treaty between the state and the Belgo-Luxembourg Economic Union.
Sawiris said the breaches concern promises made when Djezzy, a subsidiary of Egypt-based Orascom Telecom Holding (OTH), won the bid to build Algeria’s telecoms infrastructure in 2001. The company – now Algeria’s largest telecoms operator – has since invested US$3bn, created 4,000 jobs and increased telephone usage by 52% in seven years, he said.
“The Algerian government committed to a number of protections, including a promise to refrain from arbitrary interference in our operations, but has since 2008 pursued a campaign of interference and harassment which has cost Weather Investments over US$5bn in damages,” Sawiris said.
Emmanuel Gillard, a lawyer at Shearman & Sterling, the firm representing the Algerian government, told the Financial Times they intend to “vigorously defend” the charges.
Gillard contended Weather has no right to bring the case given its unclear structure and the fact it is only a minority shareholder in Djezzy. Irrespectively, he said his team believes Weather does not have a case.
In its statement, Weather claimed Algeria’s other treaty breaches include imposing more than US$950m in unfair tax reassessments and penalties between 2004 and 2009, blocking Djezzy’s payments of dividends to foreign shareholders, restraining Algerian banks from carrying out foreign banking transactions for Djezzy, thwarting the sale of the company to the MTN Group in 2010, and imposing a US$1.3bn fine on the company as a result of “groundless allegations that it breached Algerian foreign exchange regulations”.
Weather stated it formally notified Algeria of its grievances on 17 April, but was unable to engage the state in “meaningful” negotiations, forcing it to lodge its claim with ICSID.
A spokesperson for Weather said that, while Washington-based ICSID has approved the arbitration, a resolution may take months or even years.
Russia’s VimpelCom acquired a majority stake in OTH and Djezzy in April 2011, as part of its merger with Wind Telecom.
However, before the takeover was completed, Algeria announced plans to nationalise Djezzy following a dispute over taxes and fines with OTH.
This year, VimpelCom announced it would sell a majority stake in Djezzy to Algeria, subject to agreement on price. The transaction has yet to be completed.
